Morgan Stanley plans contingent interest notes linked to 20 stocks

By Marisa Wong

Madison, Wis., June 27 - Morgan Stanley plans to price contingent annual interest notes due July 28, 2016 linked to a basket of common stocks, according to a 424B2 filing with the Securities and Exchange Commission.

The basket includes equal weights of Abbott Laboratories, Altria Group, Inc., Bristol-Myers Squibb Co., Consolidated Edison, Inc., Duke Energy Corp., FirstEnergy Corp., Frontier Communications Corp., Johnson & Johnson, Kraft Foods Inc., Lockheed Martin Corp., McDonald's Corp., Merck & Co., Inc., Pepco Holdings, Inc., Pfizer Inc., Pitney Bowes Inc., PPL Corp., Sysco Corp., TECO Energy, Inc., Verizon Communications Inc. and Windstream Corp.

The notes will pay a coupon in July of each year equal to the sum of the weighted performances of the basket stocks, subject to a minimum coupon of zero.

If a basket stock's return is flat or positive, its performance will be fixed at 11% to 13%. The exact percentage will be set at pricing. If its return is negative, its performance will be the greater of the stock return and negative 20%.

The payout at maturity will be par plus the final coupon.

The notes (Cusip: 617482WE0) will price on July 25 and settle on July 28.

Morgan Stanley & Co. LLC is the underwriter.

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